Osama bin Laden is dead. So say the U.S. government, bin Laden's al-Qaida associates and three of his wives, who were with him May 2 when American commandos raided his compound in the Pakistani city of Abbottabad.

Jamshed Ayaz Khan is not convinced.

"I'd say 99 percent of our people don't believe he was there because if you come to my house, everybody will notice,'' says Khan, a retired Pakistani major general. "Many people live in Abbottabad and not a single man has said, 'I saw Osama bin Laden.' This story seems very topsy turvy.''

Ten years and billions of dollars into the war on terror, this is what the United States faces in its partnership with Pakistan: A belief by millions of Pakistanis that bin Laden wasn't killed by Navy SEALs in Abbottabad. A fear that Pakistan is infested with U.S. spies trying to destabilize the country. A suspicion that America's real interest in Pakistan is to seize the region's gas and mineral wealth.

Perhaps the only thing that exceeds Pakistanis' dislike of U.S. policies is contempt for their own crooked, unresponsive government. Many Pakistanis blame that on the United States, too, saying America has supported corrupt politicians and dictators when its billions would have been better spent on hospitals and highways.

The implications of this mounting distrust are great: The United States risks losing cooperation of a country key to bringing peace and stability to Afghanistan. Or worse, that Pakistan becomes the first failed state with a nuclear arsenal.

Already, "this country is collapsing,'' says Shahid-ur-Rehman, author of Who Owns Pakistan?. "Everyone would like to take care of their own interests.''

While the rich escape to homes in London or New York, most of Pakistan's 187 million people go hours a day without power. Passenger trains stop dead on their tracks because there is not enough diesel for the engines. Teachers are so poorly paid some never show up for class. And 800,000 Pakistanis are still living living in tents because the government has done little to help them since last year's ruinous floods.

Yet Pakistan is a country with rich potential. It has gold, copper and natural gas. It produces some of the world's best cotton, made into towels and sheets for Macy's, Target and JCPenney.

"It's not like everything bad comes out of Pakistan. We are good people, entrepreneurial,'' says Muhammad Atif Dada, chairman of the Karachi Cotton Association.

Dada heads a cotton trading company started by his family 60 years ago. He is determined to stay in Pakistan even though Karachi, its biggest city, has been wracked by every conceivable type of violence — political, ethnic, religious, drug and mafia. In July alone, 200 people were killed.

"The government claims to have been taking measures,'' Dada says, "but the ground reality is, we don't see the situation improving.''

Like flood and drought

How did Pakistan reach such a point? The answer partly lies in its up-and-down relations with the United States.

The two countries were close during the Cold War, united in distrust of Pakistan's huge neighbor India and its pro-Soviet leanings. But relations cooled when America refused military aid to Pakistan in its 1965 war with India and cut off economic aid in the '70s when Pakistan began developing a nuclear bomb.

General Muhammad Zia ul Haq, then the country's dictator, said that "being allies with America is like living on the banks of a river,'' recalls Jamsheed Marker, Pakistan's former ambassador to Washington. "Sometimes you're flooded, other times you're left high and dry.''

In 1979, the Soviet Union invaded Afghanistan, and the United States and Pakistan again drew close. The CIA funneled millions of dollars to Pakistan's intelligence services to arm Islamic fighters against the "godless'' communists.

Money also poured in from Saudi Arabia. "Religious schools mushroomed all over the place that prepared jihadis,'' says Hafeez Randhawa, an expert on Pakistani politics. "Then the Russians left and so did the Americans, leaving us with thousands of jihadis willing to die for Islam.''

In 1996, the Taliban seized control in Afghanistan and sheltered bin Laden's al-Qaida fighters. Anxious to have some stability next door, Pakistan was one of the few countries to support the Taliban government. Then came the Sept. 11 attacks and President George W. Bush's warning to Pakistan that "you're either with us or against us.''

In the past decade, the United States has budgeted some $20 billion to help Pakistan battle Islamic extremism. (Pakistan says the actual amount received is considerably less). Thousands of Pakistani soldiers have fought, and died, along the Afghan border. Pakistani authorities have arrested several top al-Qaida leaders.

But the big prize remained elusive until the May raid on bin Laden's compound.

"I'm quite certain there were elements in our intelligence agency who knew he was there,'' Randhawa says. "The problem is, a lot of infiltration of jihadis has taken place in the armed forces.''

Admired and mocked

Whether top Pakistani officials knew bin Laden's whereabouts — and there still is no firm evidence they did — the military took heavy flak from the Pakistani press and public for apparently being asleep at the switch.

Yet 80 percent of Pakistanis still consider the army their country's finest institution. They resent outside criticism.

"Whenever there is an occasion, the United States says Pakistan is not doing more or criticizes the army,'' says Abdul Qayyum, a retired lieutenant general. "When you criticize them after they laid down 5,000 lives, then people become doubtful and think America is not sincere toward Pakistan.''

Competition to join the military is strong, with successful applicants knowing they will enjoy a far better life than the average Pakistani. Large areas of Rawalpindi, the army's home city, are dedicated to upscale officer housing as well as schools, hospitals, cricket fields, squash courts and other amenities off limits to the public.

The military is also Pakistan's most powerful institution. It has tentacles in many industries, including banking, airlines and steel. Its Defense Housing Authority is one of the biggest players in the country's real estate market.

During Gen. Pervez Musharraf's years in power, from 1999 to 2007, "they acquired land at very low prices, put in roads and sold it at fairly high prices,'' says Rehman, author of Who Owns Pakistan?. "The money was going into individual pockets.''

Despite the army's constant drum-beat about the threat from India, Rehman notes that one huge Defense Housing Authority project was built "right up to the Indian border.''

As generals are rotated among different cities, the army gives them homes and other property they can sell for personal profit. For a four-star general posted to Lahore, Pakistan's second-largest city, the package is worth an estimated 60 million rupees, or nearly $700,000 — a fortune in a country where the average annual income is $1,250.

"It has changed the attitude of officers,'' Randhawa says. "The officers of the old days were more dedicated, they weren't so money-minded.''

'Mother of problems'

Avarice is not confined to the army in Pakistan, which Transparency International ranks among the world's most corrupt countries.

"Corruption is the mother of all the problems,'' Rehman says. "In Asia, you don't see any other country as corrupt as Pakistan. It's because of our leaders. To them politics is business.''

Rehman says corruption starts at the top with President Asif Zardari, husband of the late Prime Minister Benazir Bhutto. As the DAWN newspaper reported, he is a superstitious man who sacrifices a black goat every day to ensure his well-being. And he reportedly has become the second-richest man in Pakistan, with vast real estate holdings at home and abroad.

Zardari's chief political rival is another former prime minister, Nawaz Sharif. "He is absolutely corrupt to the core,'' Rehman says. Once a small-time businessman in Lahore, Sharif now heads an industrial empire that includes sugar, foundries, textiles and real estate.

Corruption seeps through all layers of government.

Shakeel Bukhari owns a factory in Islamabad that makes huge fiberglass dinosaurs, tigers and other figures for playgrounds. He also makes guard shacks — "In this day, this is good business.''

But Bukhari no longer sells directly to government agencies because he is disgusted by the crooked bureaucrats.

"They don't care about quality, they're only looking out for their own interests. If we offer something for 10 rupees, they say, 'Give it to us for 20 rupees and we'll take 10 in kickbacks.' '' Bukhari now sells to middle-men and "they can do whatever they want.''

He and others lament the government's lack of planning, whether to compete economically with other countries or to simply provide for a population growing by 2 million a year. To drive around Karachi or other big cities is to be struck by the absence of any road, sewer or other infrastructure work. There is little, if any, new housing for the poor.

Tahira Badshah lives with her three children in a one-room walk-up in Rawalpindi. The walls are bare but for three color photos of Benazir Bhutto, assassinated in 2007.

"Had BB been alive today, we would not have been in such a bad situation,'' Badshah says. "She was the only one taking care of the poor.''

"Mr. President Asif Zardari'' — she almost spits the name — "is not fulfilling the promises BB made. They are selling the name of Benazir Bhutto and enjoying the president's house.''

Greedy for minerals?

It irritates people here that the United States has helped prop up a succession of corrupt Pakistani governments, including the present one.

"We have not been able to develop because of weak leadership,'' says Qayyum, the retired general who also served as Bhutto's military secretary. "Unfortunately, the government is either in the hands of weak political leaders or military dictators fully supported by the United States of America.''

In return for that support, Qayyum and others say, leaders have been too eager to please the Americans, tolerating drone attacks that kill civilians and allowing CIA agents to roam the country.

But that is changing. Even before the "Osama drama,'' as Pakistanis call the May 2 bin Laden raid, relations had worsened over an incident in which a CIA contractor, Raymond Davis, shot to death two Pakistanis he claimed were trying to rob him. Davis was jailed for weeks until the U.S. government paid $2.4 million in "blood money'' in March to the men's relatives.

Since the Abbottabad raid, which Pakistan considered a brazen violation of its sovereignty, the government has greatly restricted the movement of all American diplomats, even the ambassador. He was stopped at the Islamabad airport in late July as he prepared to fly to Karachi to visit a girls school.

This is a country rife with conspiracy theories, and Pakistanis suspect that many Western diplomats are actually spies working with India to destabilize the world's only nuclear-armed Muslim nation.

"America wants to project Pakistan as a broken country with a broken army and therefore it has no right to keep nuclear weapons,'' Qayyum says. "People feel there is a big game and people are worried that the big powers have something up their sleeve.''

In the den of his Islamabad home, Qayuum has a wall-sized map of Central Asia. It shows Afghanistan with its estimated $1 trillion in minerals, Iran with its oil, and the Caspian Basin with its natural gas. Sitting strategically among them is Pakistan, with its own wealth of natural resources.

"I keep looking at this map and seeing how important Pakistan is,'' Qayyum says. "With all honesty, people say this war on terrorism is a facade and behind it is a war for energy.''

How does the United States counter so much suspicion and hostility?

Another retired general, Khan, says America's standing would soar if President Barack Obama followed through on his 2009 remarks that China and the United States help settle the dispute over Kashmir. Often called the world's most dangerous flash point, the Himalayan province has already sparked three wars between India and Pakistan.

"If there is a solution, India and Pakistan will become very close,'' says Ayaz, now a defense analyst. "That will be the best day for Pakistan.''

Others think it would help, too, if the United States did more projects that directly benefit the public, like the hospital Japan built in Islamabad and the highway China constructed in northern Pakistan.

Though Pakistan can be a dangerous place for Americans — a U.S. consultant was kidnapped Saturday in Lahore — two American journalists were stuck by the friendliness and helpfulness of most Pakistanis they encountered. Many have children, sisters, uncles in the United States. Though they distrust U.S. policies they admire American education and have embraced American fast food and pop culture. At a Rawalpini shopping center, crowds were constant at McDonald's and a cineplex showing Cars II and Transformers: Dark of the Moon.

Zunaira Azar, a journalist for Pakistan's PTV network, says anti-Americanism is fanned by some television anchors who think bashing the United States will help drive up ratings.

"But when there's a lunch at the embassy, these people go and indulge themselves. And if they're given a green card to go to America, they take it.''

Susan Taylor Martin can be contacted at susan@sptimes.com.

About these stories

Times senior correspondent Susan Taylor Martin and Times photographer Melissa Lyttle spent most of July in Pakistan, where they visited several cities and interviewed dozens of people for these reports.

Martin, who has been a foreign correspondent for the Times since 1997, previously visited Pakistan in 2001 and 2006.

Lyttle, who joined the Times in 2005, was making her first trip to Pakistan but has traveled to Haiti, Israel and other countries.